Business Cash Flow Working Capital Finance 7 Park Avenue Financial

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Business Cash Flow - Are You ‘ Pro’ ? The Case For Working Capital Finance Solutions And Management
The Oldest Word In The World - Not Cash Flow .. But Perhaps?

 

 

YOUR COMPANY IS LOOKING FOR BUSINESS CASH FLOW SOLUTIONS

AND ALTERNATIVES!

WHAT IS WORKING CAPITAL?  SOLVED!

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

working capital management cash flow and working capital guide to cash flow

Business Cash Flow in Canada.  It always seems to us like a bit of an understatement when you talk to clients about working capital finance solutions and their importance. Business owners and finance managers know the challenge of raising capital or monetizing existing assets... or both!

 

WHAT FINANCE NEEDS DOES YOUR FIRM NEED

 

Naturally, financing needs are diverse. It could be operational cash flow, replacing existing assets, etc. Any change in working capital cash flow impacts your firm either positively or negatively. Even managing your accounts payable effectively in daily operating activities provides movement in your cash flows. Addressing the inflows and outflows of capital is the key to long term business success as you manage liabilities due within 12 months.

 

A FINANCING DROUGHT IN THE SME ECONOMY?

 

Is there an SME drought of some type in Canadian business financing? The commercials and ads we see every day seem to say not, but in talking to small business owners and managers finance often seems just a step away from crisis mode as they search for an increase in working capital.

 

What is business cash flow? At the end of the day it's simply the flow of funds in and out of your business - most often measured by a 12-month timeframe. That cash flow comes from sales revenues/accounts receivable collections, inventory turns, and the management of your payables.

 

 

Cash flow represents all the money that is flowing into and out from your business during a specified time frame. Cash flow can consist of accounts receivable, accounts payable, and inventory. ... Working capital refers to all the current assets as well as current liabilities in your small business.

 

2 KEY ISSUES IN BUSINESS FINANCE

 

When it comes to business cash flows and working capital resources it comes down to two basic issues -

 

Managing your assets - asset turnover and the flow of money in your company

 

Accessing traditional or alternative finance to meet your needs - Understanding the cash flow statement

 

Top experts tell us that surveys of business indicate that well over 50% of all businesses in the small to the mid-market sector in Canada, in all industries are either worried or concerned about their ability to finance operations. Therefore how to calculate the change in working capital must be job 1 for the business owner and financial manager. Changes in working capital are basically the changes that arise out of changes in current assets and current liabilities on your balance sheet. That the ' textbook ' answer for the working capital formula.

 

While simple mismanagement of your business assets is one reason for that the other is simply your inability to collect promptly from late-paying clients. In some cases, your clients actually might be temporarily unable to pay!  Our traditional lending institutions such as Canadian chartered banks are risk-averse - that has made them very strong in global profiles, but has left Canadian business shall we say ' unfulfilled '!

 

SOURCES OF CANADIAN BUSINESS FINANCING

 

Rather than wait for the government to step in resourceful business owners/managers have simply gone out and accessed alternative financing to meet their cash flow fluctuation needs.

Those sources of Canadian Business Finance Solutions  bringing capital and cash flow  include:

 

A/R Financing


Inventory Loans


Access to Canadian bank credit


Non bank asset based lines of credit


SR&ED Tax credit financing


Equipment / fixed asset financing


Cash flow loans


Royalty finance solutions

 

Purchase Order Financing

Short Term Working Capital Loans/ Merchant Advance

Securitization

 

WHAT IS THE MOST POPULAR NON BANK  METHOD OF WORKING CAPITAL FINANCE

 

Invoice (A/R Finance) is probably the most popular method of addressing the working capital challenge. Accounts receivable and inventory are the 2 key current assets on the balance sheet that represent potential business liquidity.

 

THE COST OF FINANCING

 

While owners and managers are justifiably concerned about the cost of financing they sometimes forget that how you manage your assets can significantly decrease your overall financing cost. And while some ' alternative ' finance solutions are viewed as too expensive there are numerous ways to offset the costs of any financing you undertake.

 

Don't forget also there’s a huge difference between taking on new long-term debt versus monetizing assets for cash flow. Let's utilize a quick example:

 

 

A WORKING CAPITAL  EXAMPLE  OF FINANCE SUCCESS 

 

Consider a firm that borrows 100,000.00 as a term loan over 5 years, putting new debt on the balance sheet. Interest on that debt might easily be 15,000.00 over a 5-year term, even at excellent rates.   Consider the business owner who monetizes 100k of A/R for a 30 day period. Cost is approx 2000$, and new sales create profits over and over again as sales are generated and assets turned via operating capital for the sale of your products and services.

Your focus should be on the overall working capital cycle of your company - simply the time it takes to turn sales into cash. The longer that cycle is represents the need for more investment into working capital that is in effect ' tied up ' and might signal the need for external financing.

 

 

CONCLUSION

Our bottom line - don't underestimate the need for business cash flow and the power your firm has when it’s utilized properly. While ‘ cash flow ‘ may not be the oldest word or term in the world we can't underestimate its importance to business survival.

 

How much money do you need and will your firm always have enough cash? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business cash needs and working capital finance solutions.

' Canadian Business Financing With The Intelligent Use Of Experience '

 STAN PROKOP
7 Park Avenue Financial/Copyright/2024

 

 

 

 

 

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil